Blends of poly(lactic acid) (PLA) and poly(butylene terephthalate) (PBT) were prepared by reaction extrusion with para-phenylene diisocyanate (PPDI). The crystallization behavior and biodegradability were investigated by using a differential scanning calorimeter (DSC), a wide angle X-ray diffractometer (WAXD), a contact angle goniometer, and a buffer solution containing esterase. The addition of PBT into PLA polymer matrix induced the cold crystallization of PLA phase, and the crystallization rate of PLA phase was significantly accelerated when both PBT and PPDI participated in the reaction with PLA simultaneously. But the chain extension caused by PPDI decreased the crystallinity and hydrophilicity of PLA and PBT phases. The crystallinity and hydrophilicity did not affect the biodegradability of PLA/PBT blends. However, phase separation between PLA and PBT in PLA/PBT blends increased the interfacial area exposed to the hydrolysis of enzyme, resulting in the improved degradability rate of PLA phase. In contrast, the improved interfacial adhesion between PLA and PBT matrices by the reaction with PPDI reduced the area exposed to the enzyme to decrease the degradation rate of PLA phase.